Amazon has quietly made its “Universal Wish List” feature even more powerful and aggressive, VentureBeat has learned from developers. But some people are saying it’s too aggressive.

Now, if you say, find a toy that you like on Walmart’s website, Amazon’s feature allows you to see the same product in an overlay window — including a price discount — that lets you buy the product on Amazon.com, sometimes for the same price or cheaper.

(Click on image at left to expand, to see how it works).

Amazon is using the feature to target an increasing number of products on the websites of giants such as Walmart, Sears, BestBuy, and others. It’s just the latest sign that Amazon is ratcheting up pressure on competitors that have had higher costs because they run relatively expensive “brick and mortar” stores. Amazon has already pissed off big retailers with its mobile “Price Check” app.

Amazon introduced the Universal Wish List feature about four years ago, but the feature started out relatively benign — without the price discount information. But a few months ago, Amazon quietly started adding the price and discount information, essentially making the feature more predatory because it seeks to lure the user into buying the item at Amazon.com. See the “Before” image at right (click to expand), which depicts how the feature worked until relatively recently, i.e, with a relatively light touch.

The Wish List feature, at its base, is a browser add-on that you download from the Amazon site. Once it is added, you just click on the Wish List button on the top of your browser whenever you come across an item you like. It then transfers to your Wish list the pricing and other spec information of the product you were looking at.

To be sure Amazon, isn’t matching all products with discounts. Many times, its own products are more expensive.

However, one lawyer, Parker Bagley, an attorney at Goodwin Proctor who specializes in copyright law, says that if code on the existing site is being impacted, and Amazon is lifting images and showing discounts, this could develop into an “unfair competition” type claim. Bagley, who helped defend the New York Times from a site that sued the Times for linking to its pages (in a famous case three years ago that showed how little legal precedent there is in this area), says regarding Amazon’s action: “It’s arguably an unfair taking of something from your web site by a competitor.”

One company Digital Folio, which offers a competing product to Amazon’s feature, says its lawyers warned the feature could be copyright infringement. Patrick Carter, chief executive of the company, says Amazon may have overstepped its bounds by more directly tinkering with the code of the sites it is targeting. His site was toying with doing the same thing, but his lawyers recommended against it, saying it was in dangerous legal territory on copyright. Instead, his company decided to not overlay retail sites, but created a sidebar that sits to the left of the sites.

Rony Sagy, another San Francisco-based lawyer specialized in intellectual property, is more careful. She says Amazon is playing hardball, but is not doing anything illegal. After all, users are choosing to download the Wish List feature to their browser, and she says copyright claims in this case are somewhat farfetched. Use of the images could be considered “fair use,” she says.

More disturbing, however, is that Amazon is quietly grabbing lots of data about a user’s surfing and buying habits, she says, as well as covertly tracking pricing strategies of its competitors, all the while not clearly disclosing exactly what it is doing with that data.

The Amazon feature may infringe on Walmart’s Terms of Use. Walmart’s terms state that third parties are not allowed to “modify” its site or any of its content. They continue: “The Contents and software on this Site may be used only as a shopping resource. Any other use, including the reproduction, modification, distribution, transmission, republication, display, or performance, of the Contents on this Site is strictly prohibited.”

When I asked Walmart for comment, spokeswoman Amy Lester said the company is fine with the Amazon Universal Wish List because it does “not impact our code or a customer’s privacy on our site in any way.” She did not address the apparent violation of Walmart’s terms of use. Sears and Best Buy declined comment.

Above: HTML before

Above: HTML after

Digital Folio’s Carter says Walmart takes a strict interpretation when it says there’s no code impact, because there really is a form of intrusion happening (see screenshots of the code, and note the difference between the “HTML after” code and the “HTML before”.)

Carter continues: “It seems that Walmart may be saying it’s fine for Amazon to deliver any content they want now and in the future at Walmart.com, which seems to be a very risky position….What if later the Amazon’s pop-up grows in size to cover up nearly all of Walmart.com, delivers a discount to undercut the Walmart price, or delivers text, ads, or other content the site owner does not agree with — yet it is all conduct on top of and within the browsing window for Walmart.com?

Carter suggests that targeted retailers such as Walmart may not have expressed outrage because they may be developing or planning script-injection features themselves.

Carter’s Amazon-like product, Digital Folio, does not interfere with the site that you’re on. Moreover, it is independent from Amazon or other sites, and so aims to be an honest broker in pulling the best price and product specs for you (see a video of how the Digital Folio product works below). Digital Folio also shows pricing history, something that Amazon doesn’t do. Digital Folio does this by showing the prices that all of its users are seeing on specific items around the Web. This crowd-sourcing model also helps avoid the criticism that Amazon gets for keeping its own price gathering activities private.

Finally, note the video at bottom which shows how Amazon appears to even interfere with the site of a company called Tesco, causing the product in question to even disappear momentarily at times from Tesco’s site.

My own bet is that Amazon won’t get called out on this in the courts just yet, unless it goes a lot further. In the meantime, look for other sites to get more aggressive.